Pan African Resources (LSE:PAF) — Investor Presentation

0:01 Good afternoon, and welcome to the PAN AFRICAN RESOURCES PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged, and they can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Just simply type in your questions and press send. Before we begin, I would like to submit the following poll, and I would now like to hand you over to CEO, Cobus Lutz. Good afternoon to you. Good afternoon, and thank you for taking a bit of time to join us today. I guess the background to this presentation really is the operational update that we put out on the June 1, which we believe generally was quite positive. And there have been some questions following that release.

0:51 I believe the company is certainly moving in the right direction. So let's run through the presentation and then very happy to take questions afterwards, if that works. We'll do have a normal disclaimer and forward looking statements on Slide two and three. And then very briefly overview of the presentation. We always start with health and safety and deal with our operating environment in South Africa and Australia, some of the key features from the operational update, some more detail on the performance by each of our key operations, group all in sustaining costs, capital projects, which we're obviously spending quite a bit of capital. On the positive side, it's mostly growth capital in the next years. And then a couple of minutes on our growth projects, specifically the Soweto Tidings retreatment operation where we're a feasibility and then also Poplar, which is part of the Evander complex.

1:55 Couple of minutes on ESG specifically our renewables rollout. The sort of financials really is from the first half of this financial year and then so pretty much old news. And then just concluding in terms of our focus areas for the period ahead. So as we always say, we can't operate if we can't operate safely. Very proud of our safety record at PAN AFRICAN and specifically the surface business where we've gone now for multiple years without having even one lost time injury. We continue to drive the safety performance on the underground also, and I'm happy to report that generally all of the numbers are moving in the right direction.

2:43 In terms of the South African industry, currently, we're a little bit from a fatality perspective, we are regressing as an industry in South Africa slightly from last year. So there's very much a focus to ensure that we continue to operate and operate safely. The group overview, very briefly investment highlights. PAN AFRICAN represents a diversified portfolio of producing gold assets located, as you will know, in South Africa and then also in Australia. We have very materially grown production, some 40% in the last year, and, that's definitely, assisted us from a performance and financial perspective. And, I think, excitingly, there's lots of growth still to come in the years ahead.

3:34 So yes, 275,000 odd ounces of production for the year to June 30, right, sort of fifteen or sort of two weeks away from year end. A portfolio of long life assets with large scale gold resources. We have I think we're about to list on the ASX as part of the takeover of Emerson. And by calculations, we should have the second largest resource base of all of the ASX listed gold miners. So that's just an interesting digression. And then a proven track record of investor returns is one specific slide that we really like putting up. Experienced and proven management team, most of us have been around for quite some time.

4:20 And then we definitely have the ability to leverage the existing portfolio for further growth and case in point being the likes of Royal Sheba, Poplar at Evanda and then also the Soweto cluster at MTR. If we then proceed to Slide number nine, again, mentioned the sector leading returns. The share price has done really well. We can sort of talk maybe about the pullback that happened following the release of our operational update. Unfortunately, we chose a very bad day where most golds internationally were down probably between 5% to 7%. I mean, in terms of our update, we had confirmed that we would be pretty much meeting production guidance.

5:10 We'd be meeting cost guidance, albeit at the higher end due to inflationary pressures and the fact that our production wasn't exactly what we would have liked it to be specifically from Australia. So that impacted unit costs. And then we've had to taken a decision to increase the capital investment and specifically capital into Australia. And I think potentially those three factors weighed on the share price. It's since recovered. And again, I mean, overall, we really believe the group is moving in the right direction. So then the next slide, which is Slide 10, group overview. We really think it's a unique portfolio of underground assets in South Africa with long lives, a lot of scope to continue to expand these undergrounds also. And obviously, the sector leading surface business or tailings retreatment business we have in South Africa and then also now operating in the Northern Territory with after the MSN transaction, it will be some 1,700 square kilometers of ground, highly prospective exploration ground that we will control as PAN AFRICAN.

6:29 I mentioned the fact that we are growing gold production. And again, I mean, it's not many producers that can sort of do a bank of 40% production growth in one year. And this is exactly what we've done with further growth certainly in the years ahead. And specifically, we see that growth coming from Australia and expansion of our tailings retreatment business in South Africa. So yes, it's been a really good performance from a production perspective. And I mean, we couldn't have chosen, obviously, a better time to do this given the prevailing gold prices. Operational snapshot, I'm not going spend a bit much time on this slide.

7:17 There's some more detail on each of the assets. But I think importantly, now 60 odd percent of our production comes from surface and from Australia. So that should eliminate the more variable nature of the underground businesses. And from an earnings perspective and a cash flow perspective, it's probably about 80% of our earnings going forward will come from these less volatile and more stable sources. Our operating environment in South Africa and in Australia, again, I'm pleased to report the electricity situation is very much in hand. We haven't had a blackout or a or load shedding in South Africa now for a number of years, and that's a big positive.

8:04 PAN AFRICAN, if you recall, was the first miner in South Africa to commission large scale solar. I'll speak a little bit more about our renewable energy rollouts in on the next slide. We're also investing heavily in water, potable water and water retreatment. So we've expanded our Vanda three megawatt facility to six megawatts, and that's done. We've also now successfully commissioned a three megawatt plant at MTR, so it continued to invest into water retreatment. Our mining rights are long dated. We are waiting for the DMBR to release potentially some amendments to our mining laws in South Africa, and that's something we will need to monitor closely.

8:54 And the industry has been engaging extensively with our regulator in terms of that potential proposed legislation. So let's see how we where we end up there. We in terms of stakeholder engagement, we have constructive and productive relationships with our unions. Most of our labor or wage agreements still have some years to go. We are currently negotiating wages with the underground contractor at Evander. So that's really the only negotiation ongoing at this point. And then, obviously, investing very heavily in terms of the workforce. We are rolling out an application, which means that we can interact directly with the workforce. We train the workforce via the app.

9:42 And yes, I mean, that's quite exciting for us. And then, yes, as I said, mining rights are long dated in South Africa. Security continues to be front of mind. Just also given the gold price, we have seen more an influx of illegals, specifically at the likes of a Barberton. But this situation very much is in hand as a result of our excellent security team. Then key features from for the full financial year. Again, the financial year only ends on the at the end of this month, but we pretty much have line of sight on performance. I won't go into an awful lot of detail. Obviously, gold production was up really nicely. We'll talk about the specific operations, but generally, the shortfall in Australia was compensated for by excellent performances pretty much from all of the South African assets.

10:40 I'd like to sort of specifically mention MTR, where on an annualized basis, did close on 60,000 ounces. So that was a great performance, excellent performance from Ilikulu, the other large cattle tailings business. Evander mines, good performance as also the Barbaton mines underground. So generally, very good performance. All in sustaining costs, now it's important to understand pretty much in South Africa, 95% of our costs are rand based. In Australia, it's similar Australian dollar based. We have seen cost inflation and specifically reagents have continued to increase. And as a result of the cyanide we use in our tailings business, that's been a big factor.

11:29 The rand dollar exchange rate most definitely impacts us. And currently, our feeling is that the rand is quite strong against The U. S. Dollar. It's more a product in all likelihood of dollar weakness. But that does impact our U. S. Dollar all in sustaining costs. Electricity, which is generally sort of double digits in terms of South Africa. The way to mitigate that, obviously, is by aggressively rolling out renewables like we've been doing. And then in Australia, also the Middle Eastern conflict has not assisted. We've seen diesel prices increase by probably about 50% or so. That has an all con impact on our flights, on the equipment we move to site. Obviously, our open pit operations are very intensive from a diesel usage perspective. So I think generally, it's a good performance to be able to still meet cost guidance despite all these pressures for the year.

12:29 We've increased the guidance again for next year as a result of mostly these sort of inflationary impacts. Hopefully, with oil now coming down, we should be able to reap the benefits. I do think our budgeting for next year is fairly conservative from a cost perspective, and that should give us some latitude to pull back if we do see costs and the likes of diesel reagents, etcetera, come down. And then again, I mean, from a financial performance perspective, with production up 40%, with the gold price doing what it has done, it's going to be a very good year financially and a robust balance sheet. We reported more than $200,000,000 of cash on the balance sheet. This is despite, again, growing production to the extent we have and that obviously has taken a lot of capital, but it's fantastic to be in this position where we have net cash and we can see that cash balance continue to grow in the periods ahead.

13:30 So overall, I mean, we're happy with the operational update. And then Slide 16, just the gold price received I mentioned. Obviously, it's really seen us and our margins expand. These are very good metrics. And certainly, I'm obviously biased, but I really can't see, I mean, huge justification for a much lower gold price given the state of the world in the years ahead. So that should continue to stand us in good stead. If we then spend a bit of time just per operation and Slide 18, I think really an excellent track record in terms of commissioning new operations and then getting a payback.

14:15 As PAN AFRICAN, we look at new investments a little bit differently. Payback in addition to all the new normal metrics, IRR and NPV and etcetera, etcetera is one of the key metrics we look at. So we ideally want our money back in three years or less. And then we want a really nice tail to be able to generate an attractive return for our shareholders. We've been able to achieve this with pretty much most of the projects we've undertaken recently. Sure, the jury is out still in Australia. Maybe the payback is going to be a bit longer. But then, again, the prospectivity of this field, I think, is exceptional. And there's a bit of a sort of production growth graph at the bottom there, which just details our ability to continue to grow production in the years ahead.

15:06 Ilekulu on Slide 19, what a great asset for us. And importantly now, at the end of this year, we would have spent pretty much all of the capital required to sustain this asset for the rest of its life. We have another seven plus years of life remaining. In the next year, we're guiding 48,000 to 52,000 ounces. Costs will increase for the reasons I mentioned, but still at $4,000 gold or even less, I mean, an incredibly attractive asset. So we've by the end of June, maybe early July, we would be now fully commissioned the Vinkalak Pump Station. That means for the next couple of years, we'd be able to we will be able to source our production from both Van Gogh and then also the existing Lesley Bracken area gives us a bit of flexibility.

15:56 Really, I mean, all credit to the Elekudo team for what they've built here. I remember the early years where we had hiccups in terms of tons and grade. And this is now like a tap that we can turn on and turn off. And it really is a result of the team and also want to give them credit for the fantastic safety record in recent years. So yes, great flagship asset for us in terms of the future and the years ahead. BTRP, you might remember that we commissioned BTRP in 2013. Originally, it had a eight year life, and we managed to continue to extend the life. The life of the tailings operation now is some five years.

16:44 We're investing in a flotation circuit that's going to improve recoveries and underpin production. But then importantly, in the tailings is not the end of the BTRP. The board has been lighted the slow development of Royal Sheba, which by barberton standards is a low grade ore body, about three grams per tonne, but open at depth, free milling, so one doesn't require biox. So in the next five years, we have a bit of flexibility and we'll spend the money to open up Royal Sheba and that will allow us to continue to run BTLP for many years, as you can see per that graph. MTR, again, a fantastic success. It has been for the group. There were a number of skeptics when we bought this asset for $2,500,000 off the liquidator and very happy to have proven them wrong.

17:37 And as I said, a great performance specifically in the second half from MTR annualized about 60,000 ounces. And take a step back, I think from a group perspective, if we annualized H2 production at circa 300,000 ounces, which is a very good achievement in our view. But to come back to MTR, we're guiding slightly lower production in the year ahead and that's because we need to deal with a calcined layer. So this material is not great from a recovery perspective and we plan to be through that calcine in the first three months of the new financial year. We've purposely kept the material so we could sort of make sure we hit our run rate for FY 2026. Unfortunately, like there's no more latitude there, we have to treat the calcine and then continue from there. But as part of the capital we're spending in the next year, we are also installing a mill that's going to most definitely boost production in H2 of FY 2027.

18:40 We have what we call the North and South sand dumps. These dumps grade higher and they have exceptional recoveries. So with the addition of the mill, that's most definitely going to assist MTR for many years into the future. And currently, the plan would be to have that mill operational in April 2027. So we're very much on track there. Very briefly, just the socioeconomic impact of MTR has been exceptional. We've won a number of awards for this project and continue to rehabilitate as we go, reduce the ultimate closure liability. And I'm sure most of the communities around MTR are delighted to have us as a neighbor versus what was a really dismal situation, a desperate situation before.

19:29 Tenant Mines in Australia, it's a major historical gold province, historically the highest grading gold province in Australia. It's a Tier one jurisdiction. The Northern Territory government has gone out of their way to assist PAN AFRICAN in commissioning and operating this asset. We commenced production in record time. With the addition of Emerson, dominant land position, all of those royalties fall away and we control, as I've said, 1,700 odd square kilometers of exploration ground. The area very much is underexplored, circa 10% of this field has been drilled to below 150 meters. And then an experienced team that we have along with the asset.

20:15 I think if there was a bit of a disappointment in the operational update, it was a performance by tenant and we'd hope to produce closer to 45,000 to 50,000 ounces. I think we're going to end up with about 35,000 ounces for the year. This is a product of firstly the plant not operating exactly as we would have liked it to. We've spent quite a lot of capital in making sure the plant is improved. And I mean, currently, we're probably running at about 90% of where we'd like to be versus 75% previously. So that's a positive. And also, I mean, we always knew that in the first couple of years, we were going to be mining smaller scale deposits and then also putting through the Crown Pillar stockpile with grades that are highly variable.

21:04 So So you can try and estimate these things as best you can, but unfortunately, sometimes these grades don't work out exactly as planned. I think importantly for the future, we have now allowed capital to access White Devil, again, with the acquisition of Emerson. We'll own all of this asset. You might remember under the joint venture, Emerson had the right to 40% participation if they brought their stake share of the capital. So White Devil is jointly is now wholly owned by PAN AFRICAN. And I mean, it's a different greenfield deposit, the area that we'll be mining, incredibly high grade. And we've allowed a lot of capital to do the pre strip here and to make sure that we get going on White Devil. So that's why we're quite comfortable that the years ahead will be much better from a tenant perspective. You're going to be replacing Crown Pillar stockpile and smaller really sort of small satellite deposits with the likes of Widevo, which is a large scale deposit still open at date.

22:05 And then also some of the undergrounds that we bring into account, specifically Golden forty and Juno. So I mean, that is going to definitely stand us in good state. So we can expect a much better performance in the years ahead. From Australia, there's a bit of sort of talk of us taking a strategic stake in CUFE, a copper company that own the other two deposits in this field. I mean, we have Warrigo as part of this portfolio that we own wholly, which is a historic copper mine and it's the logical position for a new copper circuit in the field. So I mean probably the only position. So our sense was to work with Emerson.

22:50 We believe specifically Orlando is mostly a gold deposit. When you look at Orlando and Gecko, it's a million odd ounces. It's not to find 1,000,000 ounces in Australia is not that easy. So our intent is to work with CUFE and come up with a combined plan to access these assets. But importantly, it's not a diversion for us and it's not a change in strategy. We remain a gold company, maybe a bit of a copper credit into the future. Evander underground, what a good performance. We're into the A line and B line. At Evander, these are really good grades. We've obviously invested heavily into the infrastructure. We commissioned a sub vertical shaft and that's performing to capacity.

23:40 We've commissioned Stage one and Stage two new refrigeration plants and I'm happy to report that the temperature underground is very manageable now. And then we continue to improve the logistics. So as part of the capital for the New Year, we actually have a horizontal chairlift where currently we move people via rail on 24 level. We have a horizontal chairlift that we think will debottleneck the operation even further. And then we're also switching from pneumatic drilling to hydro drills and we're already seeing the impact. So a number of continued productivity improvements here to make sure we can meet our targets, but the life of mine of '24 and '25 only is ten years plus. And that's going to create good cash flows and very good other options in terms of expansion for PAN AFRICAN in the years ahead. And then Barbaton Mines, the old stalwart, a good performance from the underground and specifically the MRC at Fairview.

24:47 And again, pleased to say that Chiba and Kansal performing better and contributing positively to the bottom line. Group all in sustaining cost on Slide 29, mentioned some of the cost pressures, but I think let's look at it and put it in perspective, almost 90% of our portfolio produces at $1,700 That's very attractive. I mean, we've capitalized on the high gold price to also bring some really high cost ounces, but still profitable ounces to account, some buy ins at Barberton and a couple of tolling arrangements at Evander also. So that impacts the unit cost, but there's still a lot of profit to be made.

25:34 I spoke about the forecast for the year ahead. And I really think PAN AFRICAN has the ability over the medium to longer term to continue to manage our cost profile. And that's as a result of, obviously, the business being so skewed towards surface, which inherently is just lower cost, long life. The likes of our renewable energy initiatives that we're rolling out, as I said, very aggressively, and that's going to assist us from a power perspective and a number of other initiatives that we can continue to undertake to make sure costs remain reasonable. In terms of comparing us to the rest of the global sector, I think we compare very favorably.

26:20 All of the producers globally would have seen big cost pressures in the last year. Anybody that tells you differently, I'd be surprised. And that's, you know, from across the board, are we seeing a huge demand for for people and labor in Australia? That means the cost of people have gone up. I've mentioned diesel in Australia. I've mentioned, obviously, increased royalties as a result of the gold price that impacts our costs, electricity and the mitigations that we continue to implement. But generally, I think we're in a good space from a all in sustaining cost perspective. Capital projects, again, most of this capital is going to growth. The likes of Evander Capital in the next years should come down.

27:11 Barbaton, we're spending a lot of capital on refrigeration and to make sure we can continue to access the exceptionally high grade MRC. We're investing in the Western Cross ore body at Chiba Mine. So these, again, are long term investments that will benefit the group for many years into the future. Ilekulu, as I said, very limited capital for the remainder of its life. MTR, there's a bit of capital to be spent. Now this is mostly for, number one, the mill that I mentioned, which is going to benefit us from a production perspective. But then also, we need to start constructing a tailings facility on the West Fitz Pit. We were very fortunate to have tailings basically disappear underground for a couple of years.

28:00 That wasn't really the original plan. So this capital really has just been deferred. We're going to spend this now and make sure that we have adequate deposition space for the rest of the extended life of mine. And then tenant, I mean, really the money in tenants going into growth projects and specifically into White Devil, Golden 40 and Juno. We also, as part of the capital now, are including all of the renewable projects that we did not include in capital in the past. We're busy building well, there's another separate slide on ESG, so let's we can speak about the solar there. So this is a very holistic picture on capital and going forward. Despite all this capital at this gold price and at a lower gold price, I mentioned the cash flow generation of group.

28:51 And I mean, we're in a very robust position from that perspective. Organic growth, we're very excited about. The Soweto circuit at MTR should have a an updated study in the next couple of weeks, and we'll put it out to the market. But, you know, there's really, for me, no reason why this would not be a very attractive expansionary project. We can do another 30,000 to 35,000 ounces of gold for fifteen years from Soweto. Order of magnitude capital, previously, we'd say ZAR 2,800,000,000. We are refining that number, and we'll put out revised numbers as part of the feasibility. But again, at a low gold price, we still believe that this would be a very feasible project.

29:41 I'd say the key obstacles or, let's call it, external factors that we need to take into account before we push the button on Soweto would be the permitting or the servitudes. There's some 20 odd kilometers of piping that we need to build to basically move the tailings from Soweto and then pump them to this plant. So those servitudes are critically important. And then deposition space, we need to firm up on. So those, in my mind, would be the two external factors to bear down properly before we make a final investment decision on Soweto. But I mean, we have the reserves.

30:28 We have this space in the plant. So overall, in my mind, it's only a matter of time. And then I spoke about and just the incredible growth optionality we have here. And I guess to take a step back and when we bought Tennant, we knew that the first couple of years were going to be difficult from a production perspective because of the fact that you're sourcing your ore from such a number of more variable sources. Our geologists believe that there were bigger deposits to be found in the field and the geos from Emerson concurred and we were proven right with White Devil, which we're now bringing into production. And in my mind, if we find one more White Devil deposit as part of this 1,700 square kilometers, this picture looks very, very different, even more attractive.

31:21 We have currently 10 targets that we'll be exploring in the next year. So the odds of us finding a lot more gold here, I would say, is very good. And then finally, the Poplar project at Evander, which has sort of been forgotten as part of our portfolio, that's 6,000,000 ounces, seven grams per tonne, only 500 meters below surface. So it's definitely something we need to have a look at at this gold price. And obviously, sort of when the previous owners were assessing this, they had different metrics. But our view is where is the shallowest part we can but we can access this ore body. And as I said, it's fairly shallow at 500 meters. How quickly can we get into production?

32:08 Would we need a partner, etcetera, etcetera? But overall, just globally, given the availability of gold and new gold prospects, in our mind, this is quite interesting. And we have allocated some resources in the next year to continue to progress this project. ESG, I've spoken about our social license to operate, but just sort of renewables, again, to emphasize, we have 10 megawatts circuit at Evander operating, nine odd megawatts at Barberton. We're busy constructing another 20 megawatts at Evander. We have received the approvals to also build 20 megawatts at MTR as part of the capital for Tennant. Tennant at this point runs on diesel only, which you can imagine is very expensive. So part of the capital numbers you would have seen on Tennant includes a 10 megawatt solar plant and then also batteries.

33:01 So that's going to assist us from a cost perspective into in the future years. We've started construction of that plant at Tenant. So we continue to invest heavily into the future and solar and other solutions. And then we would also hope to have first electrons from our power purchase agreement with NOAH, which is South African battery, wind and solar renewable provider. So those first electrons, we would hope to come through by November of this year within sort of ramping up to 40 or 50 megawatts in the next eighteen months. So again, that's going to help us. As mentioned, it's sort of the social license to operate and very proud of what we do in terms of our communities and making a meaningful positive difference where we operate.

33:54 And that's just Slide 40 is just a bit more information on some of our renewable initiatives. I won't dwell on the financials. These are old news. Suffice to say, again, for the full year, one can expect some really nice numbers with the gold price and the uptick in production. And then to conclude, we're very much focused on not really FY 2026, the year is pretty much past. And I mean, shareholders have a very good perspective as to what we expect the results to be. Obviously, there's no slide on dividends here, but we understand for many of our shareholders, dividends is important. And it's always a balance between continuing to grow and continuing to increase dividends like we've been doing. And I think we're very surprised if we couldn't increase the dividends attractively this year.

34:44 And then, yes, just sort of obviously safety, ESG and a big focus on making sure that Australia performs as with the rest of our businesses. So that's just a short summary of where we find ourselves. I mean, let's just deal with some questions if if you're happy for me to do so. That's great. Yes. Covis, that's perfectly fine, but I'll just let you take a deep breath there. Ladies and gentlemen, please do continue to submit your questions using the q and a tab situated on the top right corner of your screen. While the company take a few moments to review those questions submitted today, I would like to remind you that recording of this presentation along with a copy of the slides and the published q and a can be accessed by our investor dashboard.

35:29 Kobus, that was not long, but if I may now hand back to you to take us through the q and a, and I'll pick up from you at the end. Thank you. Yeah. So what's caused the volatility in the share price? So the share price has been volatile, I think, since we put out the operational update. It's recovered fairly, well. But again, it's the backdrop of against the backdrop of, obviously, what's been happening in The Middle East. And we saw on the June 1 just a huge sell off generally in gold. And so we were, I think, unfortunate to put out our operational update on the same day as this sort of sell off. So yes, I mean, it's not great to see a share price come down, but also it represents, in our view, sometimes an opportunity.

36:17 And many of sort of interested parties may be sort of a buying opportunity. And again, like as I said, the share price has recovered to some extent. There's a question then on beyond satisfying transaction requirements benefits of the ASX listing. Our view is that if you want to grow successfully in Australia, it is helpful to have the currency. There's a huge demand in Australia as a result of the very robust superannuation arrangement. There's a big demand to invest into resources on the ASX. I'll go so far as to say that it's sort of probably the leading exchange for mining at this point in the world. So it makes sense to have that listing if you're going to utilize it. It means we do have to build a relationship with that investor base like we've done in South Africa and like we've done in London and The UK.

37:15 And we're happy to invest that time in terms of building the profile. And we think we have something to offer the Australian market. We're to be top 10 in terms of market cap in our assessment. And as I said, from a resource perspective, one of the top companies listed in Australia. And yes, I mean, we've seen in the past, it really sort of comes down to the effort you put into a specific market. We did a non deal roadshow through Australia middle of last year. In three days, we saw 21 institutions and the feedback was overwhelmingly positive. And again, I think the fact that PAN AFRICAN pays an attractive dividend, the fact that PAN AFRICAN is competitive from a cost perspective and that we continue to grow production, all of these factors stand us in good stead.

38:03 So what lessons have we learned from operating in South Africa that we are transferable to Australia? Look, I mean, we like to think we have great skills, open pit surf tailings retreatment is potentially interesting. Obviously, we're used to dealing with deep level underground mines. So all of these skills, the fact that we have BIOX, which deals with which successfully treats refractory ore bodies, that's a competitive advantage. And the fact that we now sort of control pretty much an entire gold field in Australia and Tennant and doesn't happen often. So yes, I mean, I think those are competitive advantages. We also, from a management perspective, we have a flat structure. I'd like to think we don't have an awful lot of bureaucracy even though we do have checks and balances in place. It means we can move quickly.

38:54 That should stand us in good stead. But the operating environment in Australia, we found, is also quite different. The labor market, as I said, is very buoyant, which means that you have to pay a lot for people. You have the fly in, fly out arrangements, which makes it more expensive. It means that you need more scale. That's why we partly one of the reasons we're ramping up to 100,000 ounces in the years ahead at Tennant. So yes, labor, the fact that we're remote makes it difficult sometimes for us to access technical skills and supplies. That's something we need to take account of also. But generally, I mean, it's a pleasant environment in terms of the Northern Territory government being very welcoming.

39:41 They've cleaned up the royalty regime, so royalties are very much on par with the rest of Australia. And I think we've been a success story in the Northern Territory over the last couple of years, demonstrated to you that you can successfully build and expand a mining operation in the territory. So that's a big positive. Next question, recent acquisition of 15% to UFE copper opportunity you're seeing as part of Tennant region is potentially just as good as gold? And then I'll get to the rest of the question. Look, mean, so PAN AFRICAN continues to be a gold company. We have the Warragao deposit as part of our portfolio in Australia. So if we produce copper as a byproduct with gold as the primary driver, then that's fine for us. Obviously, the fundamentals for copper are very strong in the years ahead.

40:37 But I think we're different to some of the other South African and international gold producers that are actively pursuing a copper strategy. Again, it's in a way, it's a secondary product for us. We are very fortunate as PAN AFRICAN that we have such a lot of growth opportunity in gold that we don't have to generally diversify too aggressively into copper. I think that's oftentimes the reason why you see some of the major gold guys going to copper. It's just the lack of opportunity in gold, which is not the case for us. So yes, I mean, we're excited about the future at Tennant in terms of copper, but with the principal focus being gold. And again, like any project we do have to meet it has to meet the return requirements. There's one specific slide, obviously, in our pack in terms of what we target targeting.

41:25 So we're not going to undertake hugely capital intensive projects at the cost of or at in terms of compromising our sector leading shareholder returns. And then last, mean another question on Poplar, which as I said is a really attractive and interesting project at Evander. Could Rule Spade also be worth looking at? Look, I think Rollsprite is longer dated. It's as a matter of fact, it was 25, 26 levels at Evander H Shaft. We're already mining Rollsprite to some extent. It's not a project that's going to be front of mind for us. Most we know that the market is not one where you can sort of go and do a hugely capital intensive ten year project and bring a new mine online. That's just not for us.

42:13 Poplar is, again, different. It's shallow. It's high grade. So in our assessment, it's quite a bit less risk. Then there's a question to say volume growth has been great, but the cost inflation between 25%, '27 is larger than many expected. What has driven that? I think we've dealt with the most of the sort of issues in terms of costs. I mean and importantly, again, let's look at the fact that 1,700 all in sustaining cost in U. S. Dollar terms, not a bad number. And that's the case for 88% of our portfolio. So I mean, we could have probably sort of grown volumes by instead of 40% by 35%, and our costs would have looked better. But then every ounce that we mined or treated or processed actually ultimately added to the bottom line.

43:13 Yes, so there's a question on tenant and then we're waiting until closing of the MSN transaction and when we expect an updated life of mine. We continue to look to optimize the life of mine. And I'd be surprised if we couldn't tweak things a bit more in the next two months or so, let's say, by our when we present our September results, give even a bit more color to the market in terms of the future tenant. And certainly, another big positive, I think, in the next twelve months would be some more successful exploration. But positively, the Emerson shareholders on Monday approved the transaction, I think, some 90 odd percent by voting and 75% by number of shareholders supported the merger or the combination. So that's a big positive.

44:08 That means that we will look to list in Australia before the end of this month and then be trading early in July, and that's a big positive. There's a question in from Dylan on the direction of travel for unit cost in FY 2027, given all the initiatives and expected uptick in production. So we have given that production the cost guidance. Again, there is cost inflation. I think we've been fairly conservative in terms of reagents, diesel, electricity and the like. So hopefully, we can do a bit better. And then and then there's also and if possible, comment on where in the CapEx cycle you are. Are there some once off assets in FY? Yes. I mean, look, I think we will put out some more detailed capital guidance as part of our final results.

45:03 But I would say the capital, if we talk about South Africa, we have about three years of investment into Barberton into the refrigeration. We are investing in at we expect the Evanda underground capital to come down in the next years. Most of that growth capital is now now pretty much spent. MTR probably is about two years of investment on a new tailings facility. And most of other capital will be just sort of maintenance capital going forward. So yes, I think it's important that in the next sort of presentation, we give a bit more guidance on future years. But capital is not an absolute number. I mean, there's always the ability to curtail capital if we wanted to or had to.

45:51 We are in a fortunate position at this point where we can continue to grow production and invest in the assets for the long term and then generate very attractive continue and also on top of it generate attractive cash flows for shareholders. So I mean, it's different each of these assets of ours have specific and different capital profiles. Barbaton, I mean, is one way that where capital has gone up. But again, it's investing into the long term future. The MRC, by all accounts, I mean, we can continue to mine for the next twenty years or so. So we want to make sure that we're well positioned there. Shahub has asked just about Australian inflation pressure versus South Africa. Look, I definitely would say that we've seen big pressure in Australia.

46:38 Obviously, we're more exposed to diesel, and that's been a big factor for us. And then also the reagents, flights, people, etcetera, etcetera. So yes, the Australian inflation is something we'll have to manage. The best way of managing inflation is producing more ounces in the next three years. And that's really what the plan is, and that's why we're spending a bit more money in Australia also. Also comment on capital inflation. The capital most of the capital we spend also again indirectly impacted by explosives diesel. So as you open up the open pits, so it's a big factor. And in labor turnover, as I said, is a concern. I mean, it's something we have to continue to manage in Australia given a very buoyant commodities sector that we have over there.

47:31 Then there's a question, assuming Poplar is pursued, when would you need to allocate capital towards it? What's indicative CapEx? Let's I think let's take the project one step at a time. There's been a lot of interest from other parties also potentially participating in the likes of Poplar. So there's a bit of water to fly under the bridge here, I think, before we make any final decision. On Poplar, just doing final feasibility work and having a look at permitting, etcetera, and then we'll come back. But again, I mean, our intent is not to go and do sort of a five, six year capital project, which is going to drain all the cash flow from the group. Shareholders should know that we're very much focused on annual returns.

48:17 So any project we do needs to just meet all of the hurdles. And then we want to continue to grow dividends and focus on projects that we bring to account quickly like Soweto, etcetera, which can be producing in two years from now. That's great, Kobus. If I may just jump back in there, and thank you for addressing those questions for investors today. But Kobus, before we direct investors to provide you with their feedback, which particularly important to yourself and the company, could I please just ask you for a few closing comments? Yes. Thank you for making time to join us. Again, I mean, I think the company is very well positioned for the future. It's great to have all of these projects and it's great to have a number of assets now in the portfolio all producing.

49:04 Generally, there are there's variability and you have unexpected movements in production. But sort of the more assets we have, the less pronounced any movements will be. I think we're in a good place, obviously, from a prospect perspective, having all the cash on the balance sheet and having all of our optionality in the portfolio. So we definitely look forward to the years ahead. Fantastic. Thank you once again for updating investors today. Could I please ask investors not to close this session as you now will be automatically redirected to provide you feedback, which will help the company better understand your views and expectations. On behalf of the management team, we would like to thank you for attending today's presentation, and good afternoon to you.